Bitcoin price has declined from $19,000 to $16,390 over the past 24 hours, as the bitcoin dominance index dipped dropped to 47 percent and alternative cryptocurrencies in the market surged in value.
On December 20, the bitcoin price decreased by more than 10 percent, and its market valuation dropped from a weekly high of $331 billion to $283 billion. Still, on a weekly basis, the bitcoin price has still recorded a slight gain, since the price of bitcoin on December 13 was merely $16,090.
Bitcoin has already started to demonstrate signs of recovery and within several hours after dipping below $16,400, the price of bitcoin has recovered to $17,000, and is en route to entering the $18,000 region.
Analysts have offered contrasting explanations to justify the recent major price correction of bitcoin. Some analysts have claimed that the price of bitcoin declined primarily due to the strong performance of alternative cryptocurrencies and the frustration of bitcoin users with high transaction fees. At the time of reporting, bitcoin wallet platforms such as Blockchain and Coinbase are recommending transaction fees in the range of $15 to $30.
The sudden increase in the value of Bitcoin Cash could also have had an impact on the short-term price trend of bitcoin, given that the price of Bitcoin Cash has increased by nearly 50 percent within the past 24 hours.
Bittrex and its Bitcoin Cash-to-Bitcoin trading pair have accounted for more than 5 percent of global bitcoin trades, processing around a billion dollars in Bitcoin Cash-to-Bitcoin trades.
Currently, the Bitcoin-to-USD trading pair of Bitfinex accounts for over $1.5 billion in global bitcoin trades. Bittrex and its Bitcoin Cash-to-Bitcoin trading pair fall behind Bitfinex, with $965 million daily trading volume. Bitfinex, HitBTC, OKEx, and Poloniex have been processing large volumes of Bitcoin Cash-to-Bitcoin trades throughout the day, processing more than $2 billion in Bitcoin Cash-to-Bitcoin trades within 24 hours. Historically, the price trend of bitcoin has had an inverse relationship with the short-term performance of alternative cryptocurrencies. As the price of other cryptocurrencies in the market surged, the price of bitcoin declined.
A similar trend has occurred over the past two days, as the bitcoin dominance index dropped to 47 percent and the demand for cryptocurrencies such as Ethereum, Litecoin, and Bitcoin Cash significantly increased.
Raita Yamaguchi, senior consultant at Nomura Research Institute, noted that the recent security breach and bankruptcy of a South Korean bitcoin exchange could have had a negative effect on the price of bitcoin in Asia.
“Both the news of South Korea’s exchange having been hacked and position adjustment following recent rallies affected the market today,” adding that South Korea market is a minor market compared to the US and Japan. “The weight of South Korea as a Bitcoin market is not that big.”
Despite today’s major price correction, investors and the market remain optimistic in bitcoin’s short-term performance throughout December, as bitcoin has historically prospered during holiday seasons during which bitcoin and cryptocurrency investment become the hot topics at family meetups.
Market’s optimism in regards to bitcoin’s performance throughout Christmas, New Years, and the integration of bitcoin by Cboe and CME could allow bitcoin to achieve a new all-time high by the year’s end.
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Last modified: March 4, 2021 5:02 PM